TomTom, Open Source, Microsoft and Death by Reactive Management


One of the big complaints about the Obama administration is that it is reactive and, as a result, is increasingly seemingly ineffective in keeping the nation's focus on the real problem (the economy, if anyone was guessing) and actually fixing anything. To my eye, the Obama administration is starting to remind me way too much of President Carter's administration, and this has more to do with management practice than ideology.


Sun employed a similar management style, focusing excessively on Microsoft and losing its way to such an extreme degree that it apparently is now facing being absorbed by a vastly better-run IBM. FLOSS, even down to the name "FLOSS," seems reactive by nature as well, and the result of a reactive management style is seldom a good thing.


Let's talk today about reactive management and why it can be a suicidal practice.


Primary Cause: Lack of Strategy


Reactive management styles typically suggest either bad strategic thinking or a complete lack of it. In its reponse to Netscape (bet you thought I was going to use another example), Microsoft had been clearly napping with regard to the importance of the browser and responded in force. But rather than focusing sharply on the problem, it focused an excessive amount of effort on putting Netscape, which was in the process of failing anyway, down, resulting in an adverse anti-trust ruling that has an incredibly long and expensive tail and still could eventually put Microsoft out of business.


When I did the post-mortem on IBM's crash in the late 80s, one of the major causes was its own consent decree coming out of a similar anti-trust action against it decades earlier. These things are company-killers because they have incredibly long tails and force massive amounts of inefficiency and bureaucracy into an otherwise well-run firm. This in turn focuses management on short-term tactics in order to show growth, and those tactics eventually create a strategic failure.


Had Microsoft thought strategically about where the market was going, rather than focus solidly on Netscape and where the market was, it might have fixed MSN sooner (which really had a massive strategic focus problem), saw search before Google did (though likely could have still missed advertising because that was non-linear thinking), and a platform like Azure could have arrived around five years earlier. This focus might have also prevented the decline of Internet Explorer's market share from a high of 91 percent in 2004 to around 67 percent today. Realize the company lost this market share to a product, Firefox, that is maintained largely by a bunch of hobbyists and volunteers.

Sun: Reactive Squared


Sun is a sad case of seeing a train coming and thinking that throwing rocks at the light on the front of it could somehow derail or stop it. In this case, the train was the industry's move to a software-centric model with much lower-cost hardware, and the headlight was Microsoft. Granted, it dented the headlight a lot, but with what appears to be an acquisition by IBM looming for a price that is a small fraction of what it was once worth -- or the alternative, complete failure -- Sun's fate is self-evident. IBM, instead, transformed over the same period into largely a software/services company and is the only large-scale firm that has proven, for now, nearly invulnerable to the economic downturn -- and so is able to buy Sun. IBM focused on where the market was going and thought strategically. Sun on Microsoft and thought tactically and the result is also self-evident.


Obama's Similar Failure


What triggered my thinking was a well-written piece in the Washington Post on the current U.S. administration's response to economic crisis. In the $787 billion package, there is $350 million for auditors and investigators. This is reacting directly to the lack of oversight that created the problem in the first place. But it's contrary to the goal of creating a healthy financial ecosystem. When a person or an industry is sick, the correct process isn't to overwhelm them with monitors so that every symptom can be reported, but to focus efforts on making them well again. What the government is doing is equivalent to locking the barn and surrounding it with armed guards after the horses have run off. What it needs to first focus on is getting some more horses. My own view wasn't that the industry was under-regulated; it was that the regulation and oversight wasn't doing the job.


In this case, the strategic goal is financial health, the tactical is oversight, and right now the excess focus on the tactical may actually prevent the strategic result that is intended. Take a look at the 90 percent tax on bonuses; this is a tactical response to the problem. What should result is that the good people in places like AIG leave and those who can't find employment elsewhere stay. AIG gets sicker and, to save a few million in bonuses, Congress loses billions in wasted recovery dollars. The focus should have instead been on getting rid of the bad employees and eliminating the policies that created the problem in the first place.


Before it is done, this tactical excessive focus on regulation could actually kill the financial industry much like over-medication can kill a person. The Bush administration largely did the same thing after 9/11. The proper fix to prevent similar airline attacks from recurring was to simply change the policy with regard to hijackers and harden the doors into cockpits. Instead, the Bush administration and most of Congress' overreaction did more damage to the economic health of the country and individual freedoms than the terrorists could have ever hoped to accomplish on their own.

FLOSS: Reactive Cubed


Open source, of FLOSS, exists largely as a result of Microsoft losing focus and being seen as a threat by the IT industry. FLOSS generally is perceived to be the anti-Microsoft. Being anti-something is being defined by it, and that is reactive. By focusing in this way, it tends to lose track of those same customers Microsoft lost and, much like the other examples, can do more damage to itself than the FLOSS leadership likely realizes. In the latest instance, with TomTom, the FLOSS leaders seem to be actually trying to declare war on Microsoft, which apparently has no real interest yet in going to war with FLOSS. But, with the current economic conditions, were Microsoft to determine war was inevitable, this would be the perfect time to wage it.


The reason Microsoft hasn't escalated is not that Microsoft is weak. On the contrary, it still has one of the most enviable battle chests in the industry. But the company finally understood that its customers and a number of governments would punish the firm financially if it didn't interoperate and cooperate better. If it is seen as the party acting defensively, things could change a lot.


Strategically, FLOSS should be downplaying and eliminating risk. Instead, much of the leadership appears to be using the TomTom event to highlight risk and doing nothing to mitigate it. While this may seem rather strange, it is typical of a reactive management style: Microsoft moves, FLOSS reacts. The danger for FLOSS is that they have effectively given up control to Microsoft, though I'll bet neither side has yet realized this.


Wrapping up: What's the Goal?


The environment and competition are always part of a good plan, but neither the environment nor competition should drive the plan. If it does, the entity is being driven by events and not by management. The result is seldom positive. Examples of this reactive behavior are very common and range from companies to politics, but always should be avoided because, in the end, they lead to failure. Proactive management spends time defining the goal and then focuses like a laser on it and steers a steady course; reactive management over-focuses on events and appears to weave like a drunken sailor. Obama's campaign was a good example of proactive management, McCain's reactive.


FLOSS is built on a reactive model, Sun went from being proactive in the '80s to largely reactive in the '90s, and Microsoft's biggest failure, its response to Netscape, was the result of reactive thinking. If you want to avoid this problem, spend time refining the goal, make sure policies and practices tie to that core goal, and never lose sight of either. If you see a situation where the goal appears to be lost, or where it seems to shift with every external event, run and don't look back.


Right now we seem to be awash in reactive management styles. I don't see that as a good thing.